Finance (No. 3) Bill (Seventh sitting)
Debate between Jonathan Reynolds and Clive LewisThursday 6th December 2018
(5 years, 5 months ago)
Public Bill CommitteesRead Full debate Finance Act 2019 View all Finance Act 2019 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 December 2018 - (6 Dec 2018)
Clive Lewis
I begin by welcoming the long overdue change to the heavy goods vehicle road user levy. As the Minister will no doubt lay out, the clause will differentiate the rates paid by efficiency, rewarding freight operators for using less polluting trucks on the UK’s roads.
Department for Transport statistics show that HGV traffic has grown on average by 2.3% per year since 2008, making it the second fastest growing type of traffic in that period. That has resulted in HGV traffic increasing, on motorways and rural A roads in particular, to an overall 17.1 billion vehicle miles. Inevitably, that has had an enormous impact on greenhouse gas emission and climate change targets, road congestion and traffic levels, road safety, and air quality—the key issues on which our amendments are based.
Amendment 115 would require the Chancellor to review the revenue impact of the clause. We believe that there is an urgent need for a financial assessment of the measure, as the freight sector has been left in the dark about the overall impact of these tax reforms. The Department has failed to publish any conclusions from its call for evidence, which closed in January. We therefore argue that it is the Treasury’s responsibility either to produce the evidence and conclusions or to undertake any new research that is needed.
We believe the analysis should focus on the costs and benefits of remaining on a time-based charging system rather than one based on distance. Will the Minister tell us what comparative analysis has been undertaken to date by Government, and agree either to publish it or to commission the relevant work and publish it in due course?
The analysis should also assess how well the HGV road user levy reflects the costs imposed by road freight on other road users, the road network itself and society at large. Metropolitan Transport Research Unit research, issued in April 2017 and sponsored by the DFT, suggests
“that a very significant amount of the real marginal costs imposed by the largest HGVs is not being met.”
That has led to poor economic efficiency and a misallocation of scarce resources. Will the Minister undertake a review of the real marginal costs imposed by the latest HGVs so that we may assess their relative economic efficiency?
Similarly, when considering the overall revenue effect of differing levels of road user levy for different categories of heavy goods vehicles, we believe it is important to factor in the huge disparity between the costs of wear and tear on road surfaces caused by HGVs and those caused by cars and lighter vehicles. The Campaign for Better Transport estimates that the standard 44-tonne HGV does 100,000 times more damage to road surfaces than a Ford Focus.
Clive Lewis
Yes. An update of the DFT’s mode shift benefit values technical report in 2015 doubled previous estimates of the cost per HGV mile to road infrastructure. Campaign for Better Transport research suggests that HGVs are paying for only 11% of their UK road infrastructure costs, predicting a shortfall of about £6 billion.
Will the Minister tell us whether the Government have made their own such estimate during the development or passage of the Bill, or does our amendment give them the opportunity to assess it for the first time? Will he produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up? In any case, will he give us the Government’s view of whether the total revenue raised will reflect a fair share of the total tax take from road users, as compared with that of those who drive smaller vehicles? In the Chamber, many MPs complain about potholes and funding for them. The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.
Finance (No. 3) Bill (Fourth sitting)
Debate between Jonathan Reynolds and Clive Lewis(5 years, 5 months ago)
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Jonathan Reynolds
I shall speak briefly on this clause. As the Minister said, the clause seeks to restrict relief for certain carried-forward losses and allow them to be used more flexibly. It then drills down into particular details for specific business segments: for instance, insurers require special consideration due to the shock losses they are uniquely exposed to.
Given the rather generous package of corporate support that the Government espouse and the ineffective corporation tax cuts, which we have already had an opportunity to discuss at length, the Opposition clearly have no issue with restricting excessive relief. However, this change appears to be a tidy-up measure on legislation that was only introduced in 2017, suggesting that the Treasury does not quite have a grip on this properly. Clearly, we would all like to see any mistakes on the statute book or in the tax code corrected, but could the Minister explain why this legislation needs correcting such a short time after its implementation? Should we perhaps anticipate further changes to the original legislation? What consultation took place with stakeholders at the time?
It seems that we have always known there were issues with this relief ever since it was first introduced, after consultation in summer 2016, in the Finance (No. 2) Act 2017—perhaps the first Finance Bill for the shadow Chief Secretary, my hon. Friend the Member for Bootle, if he can segment them in his own mind—
Jonathan Reynolds
Yes, a classic. At the time, the Chartered Institute of Taxation warned that the legislation had not been given proper due consideration. As it said in its briefing:
“From the time the proposals were announced at Budget 2016 it was clear that the legislation would be voluminous and highly complex. As we highlighted in our response to the consultation (in August 2016) the timetable proposed was not sufficient to properly consider all of the issues and to produce clear and workable legislation.
The unsatisfactory draft legislation published as part of Finance (No. 2) Bill 2017 was then removed from the pre-election Finance Bill, which caused more uncertainty for taxpayers. Although the delay in enacting the legislation has allowed a period of further informal consultation, which has improved the legislation, it inevitably led to a degree of uncertainty among those affected and has also resulted in taxpayers having to consider draft legislation which is not yet in force,”
but which will be retrospective once enacted.
“With regard to the short timetable, it is also worth noting that these provisions are not anti-avoidance provisions”,
which is when we tend to use a shorter timeframe for introduction.
“Rather, the changes were proposed as part of a package intended to ‘simplify and modernise the tax regime’, although in our view there are aspects of the changes which are very complicated and, in many cases, will involve a large number of detailed calculations, meaning that simplification will not be achieved.”
That is probably true of much of what the Treasury does, to be honest. The briefing also said:
“Legislation for these new rules has, in our view, been ‘rushed’…and, in this case, the Government has not balanced its desires to raise some modest revenue with its duty to produce legislation that can be followed with predictability and certainty.”
Unfortunately, the Chartered Institute of Taxation’s assessment that the timeframe was too short turned out to be exactly correct, and that is why we are obliged to revisit this legislation today. Continuous tweaks to matters such as these do not help to instil confidence among businesses that rely on this framework. They need certainty in their long-term operation, and endless rounds of changes are not helpful, especially in an environment where Brexit is clearly causing significant wider uncertainty.
I should also be grateful to learn from the Minister what preventive measures have been put in place to ensure that we will not go through the same legislative process in another year’s time, with further nips, tucks and fixes to defects. Finally, I would just like to know whether an estimate is available of the cost up to now of businesses having claimed this relief, which the Minister himself has said may have been excessive, and which we are today removing.